Alberta Budget Deficit $2.8 Billion For 2012 Fiscal Year

EDMONTON - The final deficit number for Alberta's 2012 fiscal year is $2.8 billion, Finance Minister Doug Horner reported Thursday.

That's $2 billion more than what had been projected in the 2012 budget, but less than the $4 billion deficit projected a few months ago.

Horner, speaking in Calgary, said the wildly varying estimates will likely continue until Alberta breaks up a continental oil production bottleneck termed the "bitumen bubble" that is driving down the price of the oilsands product.

"The reality is this (oil price) differential and the movement within that differential is something that no one has seen in the past in terms of the volatility," said Horner.

"We're going to continue to see that volatility, I think, over the course of the next little while until we are able to provide some stable market access."

Premier Alison Redford's government says Alberta is getting less than before for its oilsands bitumen because oil production is growing in the United States and Alberta has virtually nowhere else to sell its oil.

Redford is pushing to get more oil delivered by pipeline to refineries on the Gulf Coast in Texas through the proposed Keystone XL pipeline, and through pipelines to the east and west coasts in Canada.

Non-renewable resource revenues brought in $7.6 billion, about $3.6 billion less than expected, to Alberta in 2012.

Total revenue was $38.6 billion, almost $2 billion less than expected.

Total spending was $41.4 billion, just $161 million higher than planned.

The drop in oil revenue was offset to some degree by higher tax revenues.

The province took in $18.5 billion in taxes, $482 million higher than projected.

Personal income taxes were $9.6 billion, up $307 million from budget while corporate taxes were $4.8 billion, $106 million higher than projected.

There was $3.3 billion at year's end in the province's so-called rainy day Sustainability Fund.

That fund, since renamed the Contingency Account, is expected to absorb the funds needed to repair and rebuild communities hit by flooding in southern Alberta.

Redford has already committed $1 billion in immediate assistance with more to come as the province works with the federal government to determine compensation.

Horner said the capital part of the budget will have to be redrawn as they rebuild infrastructure, but said he will not go deeper into the red in day-to-day operational spending.

The Sustainability Fund had been as high as $17 billion in 2008 but has been rapidly drained since then to cover off budget deficits.

NDP Leader Brian Mason said Redford's team has only itself to blame because it cut taxes to corporations and on wealthy citizens, forcing it to rely more on volatile oil and gas revenues and then draw down on the Sustainability Fund when prices dropped.

"I never did accept or believe Alison Redford when she blamed all this on the so-called bitumen bubble," Mason told reporters in Edmonton.

"It shows the real lack of financial stewardship on the part of the provincial government."

Liberal critic Kent Hehr agreed, calling for Alberta to scrap the flat tax on personal income tax and return to a progressive one that taxes the wealthy more.

"We simply cannot keep stealing from the contingency fund to cover the huge gap between revenues and expenditures," said Hehr.

"Why do we have a rainy day fund? To help us pay for disasters like the one we are facing. But we have depleted that fund and now it is almost completely gone.”

The Canadian Taxpayers Federation is urging the province reconvene the legislature to approve an emergency budget with an eye to cushioning the long-term financial hit of the flood reconstruction by re-allocating money in the current budget.

Horner called that unrealistic and unnecessary, given that the province has the resources to deal with the flooding.

"The CTF has had some off-the-wall ideas in the past. This one probably tops the list," said Horner.

"I think Albertans want their members of the legislative assembly working on the issues at hand and the biggest catastrophe in our province in a number of years.

"We have cash in the account and we're going to deal with it."

Horner said he would have preferred to not have delivered the final numbers Thursday, given that many Albertans were busy with the floods. But he said he is mandated by law to release the results by month's end.

Note to readers: This is a corrected story. A previous version had projected oil revenues at $7.6 billion and actual at $3.6 billion.